Global stocks weather third-quarter AI, bond and crude maelstrom
SPY•Global equity indexes ended the third quarter 2% below record highs and up more than 12% for the year, despite a surge in bond yields and a 40% quarterly rise in Brent crude. The U.S. 10-year Treasury yield topped 5%, its highest level since just before the 2007 financial crisis.
1. Stocks hold near records
The most widely tracked world equity indexes were 2% below their all-time highs after gaining more than 12% this year, including a $3 trillion rise during a turbulent third quarter. Pictet Asset Management’s Arun Sai said world stocks were riding a “truly unprecedented” earnings rise, with S&P 500 earnings expected to jump at least 30% this year.
2. Bond yields climb
The U.S. 10-year Treasury yield rose above 5%, its highest level since just before the 2007 financial crisis. Yields in Japan reached multi-decade highs, while those in Germany, France and Britain hit 17- to 19-year peaks. AXA chief economist Gilles Moec said investors were concerned the rise reflected a new, structurally upward trend.
3. Oil and risks ahead
Brent crude rose 40% in the quarter and was up 70% for the year. South Korea’s KOSPI fell almost 20% in its worst quarter since the COVID-19 pandemic, while the dollar strengthened against several major currencies as Treasury yields surged. Investors were watching bond yields and whether the AI-driven equity rally would continue, as conflicts in the Middle East and Ukraine persisted.
